Correlation Between Bank of Nova Scotia and Corby Spirit

Can any of the company-specific risk be diversified away by investing in both Bank of Nova Scotia and Corby Spirit at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bank of Nova Scotia and Corby Spirit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of Nova and Corby Spirit and, you can compare the effects of market volatilities on Bank of Nova Scotia and Corby Spirit and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bank of Nova Scotia with a short position of Corby Spirit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Nova Scotia and Corby Spirit.

Diversification Opportunities for Bank of Nova Scotia and Corby Spirit

-0.61

Correlation Coefficient

Bank of Nova Scotia  Corby Spirit

Excellent diversification

The 3 months correlation between Bank and Corby is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Nova and Corby Spirit and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corby Spirit and Bank of Nova Scotia is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bank of Nova are associated (or correlated) with Corby Spirit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corby Spirit has no effect on the direction of Bank of Nova Scotia i.e., Bank of Nova Scotia and Corby Spirit go up and down completely randomly.

Pair Corralation between Bank of Nova Scotia and Corby Spirit

Assuming the 90 days trading horizon Bank of Nova is expected to under-perform the Corby Spirit. But the stock apears to be less risky and, when comparing its historical volatility, Bank of Nova is 1.82 times less risky than Corby Spirit. The stock trades about -0.33 of its potential returns per unit of risk. The Corby Spirit and is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,256  in Corby Spirit and on October 9, 2024 and sell it today you would earn a total of  21.00  from holding Corby Spirit and or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bank of Nova  vs.  Corby Spirit and

Bank of Nova Scotia

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Nova are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Bank of Nova Scotia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Corby Spirit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corby Spirit and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Corby Spirit is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bank of Nova Scotia and Corby Spirit

The main advantage of trading using opposite Bank of Nova Scotia and Corby Spirit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Nova Scotia position performs unexpectedly, Corby Spirit can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Corby Spirit will offset losses from the drop in Corby Spirit's long position.

The idea behind Bank of Nova and Corby Spirit and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..